AFC Energy in Talks With Korean Companies to Supply Fuel Cells

AFC Energy Ltd., a fuel-cell maker backed by Russian billionaire Roman Abramovich, is talking to South Korean companies about selling its devices in the country.

AFC is in discussions with energy and chemicals companies, Chief Executive Officer Ian Williamson, said by e-mail. It has 10 to 20 prospects of which six to eight energy companies are “strong opportunities,” he said.

All major Korean generators need to meet renewables targets, Williamson said. “If the targets aren’t reached then a fine is imposed which escalates year-on-year.”

AFC is hoping it can secure contracts to mimic the success of North American fuel-cell companies including Plug Power Inc. (PLUG) and Ballard Power Systems Inc., which have seen shares surge as executives predict they’ll turn a profit as soon as this year. Shares in AFC, by contrast, are unchanged from a year ago.

AFC’s devices convert oxygen and hydrogen into electricity and heat, and may be used in industrial and utility-scale applications.

Chemical companies that produce a surplus of hydrogen can cut their energy bills by using the products, Williamson said. Unlike wind and solar power, fuel cells provide a continuous electricity supply.

Commercial Scale

The company hopes to install its first commercial-scale system, in Germany, by year-end. Once operational it should be a “key” to entering Korea, Williamson said.

AFC is also working with companies including AkzoNobel NV and Linc Energy Ltd., which owns a 10 percent stake in the business. Abramovich’s Ervington Investments bought 15 percent of the London-based company for 8.7 million pounds ($14.5 million) in October 2012. It has since cut the stake to 11 percent and remains the largest holder, according to data compiled by Bloomberg.

North American fuel-cell makers Plug Power, Ballard and FuelCell Energy Inc. (FCEL) climbed to their highest in more than four years March 11, making them the Nasdaq’s three biggest gainers for the previous month. The shares slumped yesterday.

“Valuations are swinging a little bit at the moment,” Williamson said. “But it’s pleasing to see investors start to take fuel cell stocks seriously.” U.S. investors are “moving towards accepting that fuel cells are going to be a player within the energy mix.”

To contact the reporter on this story: Louise Downing in London at ldowning4@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net Alex Devine, Randall Hackley

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